New Delhi, Sept.27: Pepsi may be spared from a mandatory divestment of its equity, unlike rival Coca-Cola which could not avoid the exercise sometime back.

The department of industrial policy and promotion (DIPP) is exploring the possibility of waiving the divestment of 49 per cent equity for Pepsi Foods Private Limited, the wholly owned subsidiary of PepsiCo Inc.

Under the government policy, local subsidiaries of multinationals are required to divest part of their stake after five years. These companies are expected to make an initial public offering (IPO) or divest through other ways.

However, the ministry of food processing is yet to take a view on the issue.

Andes Kumar, director of the food processing ministry, said, “I cannot comment on it because I am not aware of any details about the decision taken about Pepsi by the DIPP.”

“The latest meeting of the DIPP was held last week which we were unable to attend. The agenda, minutes and decisions of the meeting are yet to reach us,” Kumar said.

Pepsi had argued for a waiver on the grounds that the government had now allowed 100 per cent foreign direct investment in food processing.

The US multinational had committed itself to divesting 49 per cent in its Indian operations to domestic shareholders within five years. The issue is due this year, and Pepsi has now requested for a waiver.

In 2002, Coca-Cola had to honour its divestment commitments.

When Coca-Cola was dilly-dallying about an IPO, citing huge losses, the government directed the company to explore other options. Coca-Cola did a private placement and subsequently bought back the stake from domestic investors. The Atlanta-based Coke is increasingly relying on emerging markets for growth.

Soft drink sales in the US is slowing down as health conscious consumers opt for bottled water or teas.